DVC must stop rentals.....

[Matty B13]

I bought my house in 2005 too. Then the market tanked. I’ve held onto it though. I sincerely hope they get stuck with them. I know it’s mean-spirited, but it would serve them right & I am not feeling overly charitable on this subject.

I don't feel bad at all, all Their speculation is what drove up the prices on DVC. This same thing happened in the housing market, look at what happened at Zillow which bought up a ton of houses then found out the houses weren't worth nearly what they paid for them and had to lay-off the whole department. While they did this though, it drove prices up 20% to 30% higher than they should have been.

 

[PrincessMati]

The big rental/resale companies are doing this as well. Buy, strip, rent, flip.

An that is what my complain is. And guess OP's too. It is not about someone giving it to their friends, nor renting a year or two you are not able to go, even to help pay your dues some times. But the problem is doing all of this just to make profit. Abusing loopholes

 

[PrincessMati]

You are arguing a point that is not accurate. DVC has stated that more than 20 reservations could mean your membership is being used for what they define as commercial purposes vs renting in general. There is a difference. We are allowed to rent. Period. That element of commercial is expressly granted to us.

Under 20 has been defined by Disney to be okay, even if all are rentals. And yes, I know that for a fact as I asked.

They set the rules and based on that, they don’t care to define for commercial purposes to be less than 20 reservations or rentals at this time. You don’t have to agree but that is what it is.

Do they have the right to change those rules when defining what it means to be using a membership for commercial purposes. Yes.

But, legally, any change would need to be what most would be considered a reasonable definition that an owner is using thhe memgerhsip for commercial purpose va renting within the terms of the contract.

It is why the language says we can rent but not for commercial purposes and then goes on in the contract to expressly include language as to what could constitute commercial.

DVC has drawn the line at 20. Less than 20 it falls within our legal right to rent. More than 20, and you may be subject to a review.

With that, we simply don’t agree.

May I ask one last thing. Aren't these big rental companies for commercial porpuses? I mean they charge about $5pp. That adds up quickly. I don't get it

 

[xdan0920]

May I ask one last thing. Aren't this big rental companies for commercial porpuses? I mean they charge about $5pp. That adds up quickly. I don't get it

A good question. Seems like any rental through an intermediary would be commercial.!

 

[xdan0920]

Fwiw, I was going to list 110 expiring points last year. (Refuse to go anywhere with mask mandate). And the website I used, encouraged me to book a week, then rent that. Left a bad taste in my mouth so I just ate the points. I still get emails from them 3-4 times a week.

 

[Sandisw]

May I ask one last thing. Aren't these big rental companies for commercial porpuses? I mean they charge about $5pp. That adds up quickly. I don't get it

They are simply considered a middle man who puts owners and renters together.

The rules apply to owners and how they are using their memberships. That is what DVC has to e right to monitor..each individual membership.

Now, these agencies certain have made it easier for owners to rent points and it’s possible that since they began that DVC has reason to monitor memberships more closely.

But in the way they operate, they basically are being paid a “finders fee” by the owner to set them up with a renter ti create that private transaction.

For example, an owner can’t set up their own business to offer their own points for rent. That is expressly prohibited. But an owner can certainly create a business to help owners who have the right to rent their points do so and that is all those businesses do. Not really any different than what is allowed here on our Rent/Transfer board. Just a place to advertise

Years ago, one rental company at used to be asked to be added as an associate so they could do everything. DVC put a stop to that and adjusted the rules for associates.

In the end, the only thing that can happen is DVD can update what their definition is for commercial purposes.

 

[CarolMN]

A good question. Seems like any rental through an intermediary would be commercial.!

Unless the agency actually owns the contracts & exceeds the 20 rentals that triggers an audit, they are not in violation of any rules. The vast majority of the spec rentals on the brokers' sites are owned & controlled by individual DVC members, and IMO, very few of them have multiple spec reservations listed. The brokers just get a fee for providing a match and facilitating the deal. No legal way to stop that.

 

[Chuck S]

I don't feel bad at all, all Their speculation is what drove up the prices on DVC. This same thing happened in the housing market, look at what happened at Zillow which bought up a ton of houses then found out the houses weren't worth nearly what they paid for them and had to lay-off the whole department. While they did this though, it drove prices up 20% to 30% higher than they should have been.

Well, not just Zillow. I get calls weekly from foreign investors wanting to know if I want to sell any of my properties. I did sell one last year. I paid $67K for it about 8 years ago, fixed it up , and it sold in a cash deal for $140K It is a sellers market right now due to a lot of factors, but I think foreign investment is what is driving it mostly. They invest in a property and rent it through a property manager, much like the way DVC Rental work.

 

[Matty B13]

Well, not just Zillow. I get calls weekly from foreign investors wanting to know if I want to sell any of my properties. I did sell one last year. I paid $67K for it about 8 years ago, fixed it up , and it sold in a cash deal for $140K It is a sellers market right now due to a lot of factors, but I think foreign investment is what is driving it mostly. The invest in a property and rent it through a property manager, much like the way DVC Rental work.

Yeah I know, Investment Firms both Foreign and Domestic have been doing this for a while now, especially with all the cheap money that the Fed was giving out.

 

[limitdis]

Expensive nights are too expensive and cheap nights are too cheap, creating a severe demand imbalance.

this makes alot of sense!

 

[drusba]

Renting is, by definition, commercial activity. It's the textbook example of commercial activity. Renting points to your mother is still commercial activity.

Disney isn't saying "fewer rentals than X is not commercial activity," they're saying "fewer rentals than X is too small for us to bother doing anything about."

AND, you could run 100 rentals and Disney still isn't doing anything about it.

Agree with the response above of @Sandisw . Under the terms of the POS documents, renting is expressly not commercial activity. The POS distinguishes between "personal use" which is a member's right, and use for a "commercial purpose," which is improper. If you read through the applicable terms of the POS documents, you will see the following:

"Personal Use" expressly includes a member's right to lease (rent) to others. Thus, renting, in and of itself, cannot be considered commercial activity that can be banned.

A commercial purpose implies that one is essentially acting in the business of doing something. That is the kind of activity that can be banned. The terms of the POS and rules created also support that definition when it relates to renting. Under the the POS, one commits improper commercial renting if one engages in a pattern of rental activity from which it can be concluded that the member is acting as a "commercial enterprise." Many terms also deal with "Commercial" units, the resort units used by business entities. The activity is deemed "commercial" if the owner intends to use the property for a "business enterprise." In essence, the renting that is actually banned under the "commercial" terms of the POS is for a member to be using his points mainly to conduct a business of renting rooms.

DVC itself has shown that its own interpretation of the POS agrees with that conclusion. In December 2007, DVC put out a rule relating to rentals. That rule creates a presumption that if a member does more than 20 reservations in any given 12-month period, the member will be presumed to be in violation of the commercial purpose prohibition. And even that presumption can be defeated if the member shows the reservations were done for allowed "Personal Use" (which, as noted, is a term that includes the ability to rent).

That rule does not indicate any belief by DVC that members can be barred from doing some rentals to gain some income to cover dues, or doing rentals now to eliminate excess banked points that they cannot use for their own stays, including because many of them cannot even go to Disney right now either out of fear getting covid, particularly if you are in a high risk group, or because travel from other countries still has difficult restrictions. To ban such members from doing rentals would just be another covid-related punishment.

Some believe that DVD/DVC could just unilaterally amend the POS to bar rentals under its discretionary authority to make amendments without the actual vote of the members. That discretionary authority has limitations, one of which is that it cannot be used to do any amendment that "would prejudice or impair to any material extent the rights of any Owner." To take away an owner's right to rent, even if one assumes it could be done, would require the actual vote of the members.

 

[Marionnette]

A good question. Seems like any rental through an intermediary would be commercial.!

The intermediary is a commercial interest. The owners who use an intermediary are not. DVC has limits on how much each owner can rent but I don't know if they have the ability or the inclination to go after the intermediaries.

Changes were made in the past in order to curb some of the rental brokers' activity. IIRC, one broker would have owners add their name on as an associate member so that the broker had free access to the owner's points in order to quickly book reservations for a renter. My brain is fuzzy on the details on how that was stopped.

The "20 rentals = commercial renting" rule was established because of wide-spread commercial renting and should perhaps be revisited to lower that number. Let's face it, in the time that has elapsed since the rule was made, points charts has exploded and it takes a heck of a lot of points to reach 20 rentals in a 12-month period. A commercial renter would need tons of points to reach 20 rentals in a year.

Which leads to the third way in which DVC acted to thwart commercial renting and that was to limit the total number of points that one can own - both at a single resort and overall. There are still ways to get around that limit (dividing ownership by trusts, individual names, joint ownerships, LLC, etc). I could own the maximum number of points under my name only. My husband could own the maximum under his name. We can jointly own more under both of our names and our company (an LLC where we are the sole proprietors) could also have the maximum number of points. Our adult kids could also be in on it. But at the time that this rule was enacted, there were commercial renters that owned extremely large quantities of points and this was done to at least curtail their activity.

 

[xdan0920]

Agree with the response above of @Sandisw . Under the terms of the POS documents, renting is expressly not commercial activity. The POS distinguishes between "personal use" which is a member's right, and use for a "commercial purpose," which is improper. If you read through the applicable terms of the POS documents, you will see the following:

"Personal Use" expressly includes a member's right to lease (rent) to others. Thus, renting, in and of itself, cannot be considered commercial activity that can be banned.

A commercial purpose implies that one is essentially acting in the business of doing something. That is the kind of activity that can be banned. The terms of the POS and rules created also support that definition when it relates to renting. Under the the POS, one commits improper commercial renting if one engages in a pattern of rental activity from which it can be concluded that the member is acting as a "commercial enterprise." Many terms also deal with "Commercial" units, the resort units used by business entities. The activity is deemed "commercial" if the owner intends to use the property for a "business enterprise." In essence, the renting that is actually banned under the "commercial" terms of the POS is for a member to be using his points mainly to conduct a business of renting rooms.

DVC itself has shown that its own interpretation of the POS agrees with that conclusion. In December 2007, DVC put out a rule relating to rentals. That rule creates a presumption that if a member does more than 20 reservations in any given 12-month period, the member will be presumed to be in violation of the commercial purpose prohibition. And even that presumption can be defeated if the member shows the reservations were done for allowed "Personal Use" (which, as noted, is a term that includes the ability to rent).

That rule does not indicate any belief by DVC that members can be barred from doing some rentals to gain some income to cover dues, or doing rentals now to eliminate excess banked points that they cannot use for their own stays, including because many of them cannot even go to Disney right now either out of fear getting covid, particularly if you are in a high risk group, or because travel from other countries still has difficult restrictions. To ban such members from doing rentals would just be another covid-related punishment.

Some believe that DVD/DVC could just unilaterally amend the POS to bar rentals under its discretionary authority to make amendments without the actual vote of the members. That discretionary authority has limitations, one of which is that it cannot be used to do any amendment that "would prejudice or impair to any material extent the rights of any Owner." To take away an owner's right to rent, even if one assumes it could be done, would require the actual vote of the members.

Could they simply crack down on the DVC stores out there?

 

[RoseGold]

Thanks. Just so we are clear, again. I don’t need advice on how to use a product I’ve owned and used for 20 years.

Wasn't that the point of this OP?

Or are we just complaining about who is on our lawn? How about how much we all hate Aulani and all its cheap points next?

 

[jillt2ph]

Another way to look at it is DVC has allowed too many small contracts over the years. A simplified example of this: say Early December is a very popular travel time, and the resort has mostly 150 point contracts, you've basically doubled demand over a scenario where the same resort would have mostly 300 point contracts. . Basically twice as many owners vying for the same reservation. And that doesn't even account for the people who buy fixed weeks for studios during popular travel times.

I say this all the time! It is why I have no issue with Disney raising the number of points required to be a blue card member. I wish they would stop selling the small contracts, period, since they can't direct how they are sold in the resale market. Too many owners with minimal points.

 

[Pens Fan]

The intermediary is a commercial interest. The owners who use an intermediary are not. DVC has limits on how much each owner can rent but I don't know if they have the ability or the inclination to go after the intermediaries.

Changes were made in the past in order to curb some of the rental brokers' activity. IIRC, one broker would have owners add their name on as an associate member so that the broker had free access to the owner's points in order to quickly book reservations for a renter. My brain is fuzzy on the details on how that was stopped.

The "20 rentals = commercial renting" rule was established because of wide-spread commercial renting and should perhaps be revisited to lower that number. Let's face it, in the time that has elapsed since the rule was made, points charts has exploded and it takes a heck of a lot of points to reach 20 rentals in a 12-month period. A commercial renter would need tons of points to reach 20 rentals in a year.

Which leads to the third way in which DVC acted to thwart commercial renting and that was to limit the total number of points that one can own - both at a single resort and overall. There are still ways to get around that limit (dividing ownership by trusts, individual names, joint ownerships, LLC, etc). I could own the maximum number of points under my name only. My husband could own the maximum under his name. We can jointly own more under both of our names and our company (an LLC where we are the sole proprietors) could also have the maximum number of points. Our adult kids could also be in on it. But at the time that this rule was enacted, there were commercial renters that owned extremely large quantities of points and this was done to at least curtail their activity.

Interesting. In the example I gave above with the guy buying/selling deeds left and right, I remember that some of the deeds were in his name only, but others had other people listed on them as well - not always the same people, either. I'm assuming that was to get around the total point restriction.

 

[drusba]

Could they simply crack down on the DVC stores out there?

DVC would have to find some legal way to go after the brokers who do rentals, and it is doubtful there is any. The key activity of brokers these days is that they actually do not do the rentals or reservations. They are simply the go-between for the member/lessor and the renter/lessee. It is the member who does the actual reserving and the members who deal with the brokers are mostly those who just need to do some rentals to help cover dues and use points when the member cannot. The member in such a situation is acting in accordance with the POS. DVC has no enforceable contracts or other legal relationship with the brokers that could be used to stop the brokers from functioning.

The existing broker type of business actually grew out what were once group member rental businesses. There have always been maximums to the number of points any particular DVC owner can own, but in the mid-2000's, numerous rental businesses existed, which often consisted of groups of members, e.g., just having a husband and wife with separate ownership interests could double the total amount of points that could be owned and rented. The internet helped in the creation and activities of those businesses as a place for advertising and doing such reservations. Also, two rules favored the activities of those businesses at the time. One was that a member could transfer out or in (but not both) any amount of points during each use year, and thus those in the business of renting could thus get multiple transfers into their account, greatly increasing the number of available points for renting. The other was that any member could add an associate member to his account, giving that associate member the power to make reservations using the member's points, and there was no limit to the number of accounts on which one could be an associate member. Those members in the renting businesses were making deals to be associate members with numerous other members so they could rent more points.

In the mid-2000's, DVC adopted three rules to address the activities of those member businesses. One was the 20-reservation per year rule per membership noted in my post above. A second rule was to adopt the one transfer per use year rule (which had actually been the original transfer rule in the 1990s). The third new rule was to limit any member's ability to be an associate member to no more than four memberships. Soon after the rules were created, many members started to receive warnings that their activities indicated a violation of the new rules. The rules did not do away with rentals (something even DVC recognized it could not do) but significantly reduced the reservation problems that existed. They also resulted in the start and growth of the broker businesses that exist now. Such brokers may themselves have memberships and some points but the businesses are mainly devoted to being the go-between that hooks up owners with those who want to rent.

 

[BeachClub2014]

Wasn't that the point of this OP?

Or are we just complaining about who is on our lawn? How about how much we all hate Aulani and all its cheap points next?

Lol, exactly

 

[Jayunit09]

I hope you know that for Thanksgiving & Christmas you’ll need to walk your reservation if you want a studio. Or you can rent one off of a FB rental group.

I work in grocery retail so I’d never have those weeks off anyways. And we bought planning 2 bedrooms every other year so I’m hoping it won’t be an issue.

I appreciate that heads up though!

 

[xdan0920]

Lol, exactly

LOL. So funny right? Despite numerous examples of people abusing the rental system, it’s hysterically funny that I’m so dumb I didn’t realize I wanted to go to Disney World 5 months ago.